Sheila Bair, head of the Federal Deposit Insurance Corporation, which helps oversee U.S. banks, talks with PARADE about bad loans and the safe way to buy a home.

What are banks doing to contain the mortgage crisis?

During the housing boom, some lenders many of which were not banks gave loans to people without documenting they had sufficient income, or they gave loans at low rates which then rose much higher. Most FDIC-insured banks were not involved in this type of lending, and all are now required to ensure that borrowers can make payments over the life of the loan.

What should people do if they feel like they're holding a risky mortgage?

If your loan is unaffordable now or will be soon, try to renegotiate it with your lender immediately. The government has strongly encouraged lenders to modify the terms of unaffordable loans to keep people in their homes—even delinquent borrowers.

How can homebuyers protect themselves today?

First, calculate what you can truly afford to pay per month, keeping in mind that ownership entails taxes and other expenses. Second, figure out exactly what you'll pay over the life of any potential mortgage, including future increases, and don't count on being able to refinance. Third, shop around and consider fixed-rate loans. While rates may be higher, they are more stable.